Tax Trap Decentralized Finance (DeFi)

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  • Post category:Blockchain

Decentralized Finance (DeFi) is currently on everyone's lips and is a megatrend in the block chain world. The hype is a bit comparable to the ICO era in 2017, but it is hoped that this trend will last longer and be more stable. At the moment, however, it looks as if DeFi has what it takes to disrupt the previous world of financial services.

At its core is the possibility to grant loans in particular with the help of decentralized applications without intermediaries (like a bank). Currently, lending via the Ethereum platform is popular.

Just as breathtaking as the possible chances of winning, however, is the fact that there is obviously the impression in the scene that corresponding profits can be obtained without the "involvement" of the tax office or without tax consequences.

On the one hand, the non-disclosure of interest received through lending could sooner or later bring the tax office or, even worse, the tax investigation department onto the scene.

On the other hand, it is often overlooked that the lending of crypto-currencies, such as Ethereum, could lead to an extension of the tax speculation period from one year to 10 years. It is to be assumed that the tax authorities consider the lending as use of the crypto currency as a source of income according to § 23 Abs. 1 Satz 1 Nr. 2 Satz 4 Einkommensteuergesetz (EStG). The consequence of this would be that a tax-free sale of the crypto currency used for lending would only be possible after 10 years from the purchase of the crypto currency.

Everyone, which is active over DeFi "business", is thus well advised to think now and then also of the tax office.